From the Desk of Dave Kanicki: April 2, 2013

“We see farm equipment dealers selling at no margin, or at a negative margin, just to get the parts and service business. Dealers are giving stuff away to protect their market share numbers. Hopefully, at some point, manufacturers will wake up and see that their dealers need to make some money. It’s pretty hard to make anything happen when you’re only market share driven. Try taking your market share to the bank to pay off a loan. I’m pretty sure your banker will have a hard time accepting that.”

These are the best quotes on market share that any dealer has ever allowed me to use and directly attribute to him in writing, and they all came from Dan Butler, Butler Machinery, a little over 3 years ago. (Please see “Taking on Ag’s Biggest Dealers,” Farm Equipment, March 2010, pp. 20-26 or online here.)

Based on my experience, farm equipment dealers, in general, do not like to talk about market share on the record for fear of catching hell from their mainline supplier, who is pushing it down their throats. But leave it to our regular “Business of Selling” columnist Dr. Jim Weber to say what most people won’t — on the record.

In the last issue of Farm Equipment, Dr. Weber addressed “The Myth of Market Share” and in the April/May issue he follows that up with “Realities of Market Share.” He makes several salient points that bear repeating, especially the difference between market share leaders vs. profit leaders. In his March 2013 Business of Selling commentary, he explains:

In our upcoming issue, Dr. Weber says he recognizes that market share has its place in the farm equipment business, but how it’s viewed and pursued is a function of an organization’s basic culture.

He says, “A review of dealers and manufacturers who have consistently increased their market share over the last 40 years while maintaining a high level of profitability would reveal a few common denominators. First, their management team has been consistently groomed from within; and second, the background of the most successful CEO’s has been marketing or operations, rather than finance or accounting.”

But the real crux of the matter is the focus of the business, itself. Dr. Weber adds, “The final characteristic of a profitable market share leader is that they develop a culture where profitability is the focus and market share is a byproduct of good operational practices.

"The emphasis is on customer share and customer satisfaction rather than on selling machines and volume bonus checks. Profitable market share leaders believe in the old maxim that while sales sells the first machine, parts and service sell the second and third machine. Market share is not bad; it just shouldn’t the primary focus of an equipment dealership.”

In other words, market share leaders are rarely the most profitable, which, when you think about it is lose-lose. On the other hand, profit leaders win whether they’re market share leaders or not.

Dave Kanicki

Dave Kanicki is the Executive Editor of Farm Equipment and Editor/Publisher of Ag Equipment Intelligence (AEI) and its related research, reports and broadcast channels. He joined Lessiter Publications in 2005 after decades of experience as an Editor/Publisher of metals manufacturing titles. His Farm Equipment and AEI work has been nationally recognized by both trade business and business press associations. He is a graduate of Central Michigan University.

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